Consumers Confidence Drops In November
Tuesday, November 27th 2007, 10:30 am
By: News On 6
NEW YORK (AP) _ With Christmas only a month away, American consumers became more pessimistic about the economy in November, sending a widely watched barometer of confidence to the lowest level in two years.
The New York-based Conference Board said Tuesday that its Consumer Confidence Index dropped to 87.3, down almost 8 points from the revised 95.2 in October. It was the lowest reading since 85.2 in October 2005 when gas and oil prices soared after hurricanes flooded New Orleans and shut down a large chunk of the nation's oil refineries. It also marked the sharpest drop since September 2005 when the index plummeted 18 points from the previous month. Analysts had expected a reading of 91.5 in November.
``Consumers' apprehension about the short-term outlook is being fueled by volatility in financial markets, rising prices at the pump and the likelihood of larger home heating bills this winter,'' said Lynn Franco, director of The Conference Board Consumer Research Center, in a statement.
The Present Situation Index, which measures how shoppers feel now about the economy, fell to 115.4 from 118.0 in October. The Expectations Index, which measures shoppers' outlook over the next six months, declined to 68.7 from 80.0.
Wall Street paid little attention to the consumer confidence report, rebounding modestly Tuesday after the Abu Dhabi Investment Authority said it will invest $7.5 billion in Citigroup Inc. _ a vote of confidence for the nation's largest bank, which has struggled with heavy losses amid the ongoing mortgage crisis.
The Dow Jones Industrials rose 95.27, or 0.75 %, to 12,838.27.
For retailers, the downbeat report on consumer confidence further fueled concern that the holiday shopping season will be weak. Retailers struggled with disappointing sales this past fall, and while many retailers were encouraged by better-than-expected sales for the official start of the holiday shopping season, it was the fat discounts that lured consumers in. The big worry is that shoppers will take their time returning to the stores this holiday season amid worries about higher gas, an escalating credit crisis and a slumping housing market.
A report, released Tuesday, on home prices offered another sign that the housing slump is far from over. According to S&P/Case-Shiller index, U.S. home prices fell 4.5 % in the third quarter from a year earlier, the sharpest drop since Standard & Poor's began its nationwide housing index in 1987. The index also showed that prices declined 1.7 % from the previous three-month period, the largest quarter-to-quarter decrease in the index's history.
One bright spot has been the labor market, which has held steady, but the latest report shows growing concern about job security.
The consumer confidence report _ derived from 5,000 responses through Nov. 19 _ showed that shoppers' outlook for the labor market was more pessimistic. The % of consumers expecting more jobs in the months ahead fell to 10.8 % from 13.3 %, while those anticipating fewer jobs rose to 23.1 % from 20.2 %. The proportion of consumers expecting their incomes to decrease in the months ahead rose to 11.0 % from 9.1 %.